NZ's foreign buyer ban hits house prices in Queenstown

Wellington

NEW Zealand's ban on foreign buyers is damping house prices in Queenstown, a stunning winter playground for the rich that has been a magnet for wealthy overseas investors.

Nestled on the shores of a pristine lake on New Zealand's South Island, and ringed by majestic mountains, Queenstown's popularity with buyers from Australia, Asia and the US had seen values double in little more than three years.

The boom has been brought to an end by a nationwide ban on foreign property buyers the government introduced last October in a bid to make housing more affordable for its own citizens.

"It's very, very clear the foreign buyer ban has impacted the Queenstown market," said Nick Goodall, Wellington-based head of research at Corelogic New Zealand. "It's a massive chunk of demand taken out."

Prices in the Queenstown region fell 0.1 per cent in June from a year earlier - the first annual decline since July 2011 - and dropped 2.2 per cent the past three months, according to Corelogic data. At its peak in 2017, Queenstown's annual house-price inflation hit 32 per cent.

Government figures show the number of property transfers involving a foreign buyer fell to 2.7 per cent in the first quarter from 9.7 per cent a year earlier.

The median price was still NZ$1.17 million (S$1.07 million) in June, maintaining Queenstown's reign as the most expensive real estate market in the country.

The town's allure is not hard to fathom. With two ski fields on its doorstep, and another two just up the road in fellow resort town Wanaka, it has become a winter playground for those who can afford it.

Bungee jumping, thrilling high-speed jet-boat rides and mountain biking trails continue to attract tourists year-round, while a picturesque landscape dotted with vineyards completes the package.

The curb on foreign buyers comes at a time of increased supply. Queenstown is the busiest region for home construction, with new building consents about 8 per cent of existing housing stock, according to Corelogic.

The ban on foreign speculators has also impacted Auckland, the nation's most populous city, where prices have dropped 2.7 per cent over the past year. But it is not likely to suppress house prices at a national level amid a shortage of new building, continued immigration and record-low interest rates. BLOOMBERG